Tuesday, May 10, 2011

US College Debt Burden Growing Fast

link here to article

The average 2011 college grad will have $18,000 of debt to repay. The average starting salary for 2011 grads will also be lower. It was $46,000 in 2009 but it has dropped to $36,800 in 2011. The debt burden is closer to $24,000 if loans by parents are included. Many grads will have to pay the parental loans back. The debt burden is 47% higher (corrected for inflation) than it was a decade ago. That is because tuition costs have been inflating at 5% while income growth for middle class families has been flat.

While this is not good news for 2011 grads, it is also bad news for the economy. It will delay the growth in new household formation and curtail spending on consumer durables. In the long run it raises the question of the affordability of higher education. Higher education may be less available to future generations if price inflation continues to grow faster than household income.

No comments:

Post a Comment